Question

•T-Co is a successful company. You have estimated the cost of equity  to be11% and expect share...

•T-Co is a successful company. You have estimated the cost of equity  to be11% and expect share buybacks and dividends to grow 8%/year, and you believe the company could be sold for $2.4 billion at the end of Year 4

•Fill in Years 2 and 3 of the timeline below and calculate the company’s current market cap and share price given 100 million shares outstanding

Timeline (in millions)

Year 0 1 2 3 4
Dividends 45
BuyBacks 55
Div+Buybacks 100
Market Cap 2,400
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